diff --git a/common/xfdesktop-common.h b/common/xfdesktop-common.h
index cfd41e6a..5d7a7622 100644
--- a/common/xfdesktop-common.h
+++ b/common/xfdesktop-common.h
@@ -64,6 +64,8 @@
 #define DESKTOP_ICONS_SHOW_FILESYSTEM        "/desktop-icons/file-icons/show-filesystem"
 #define DESKTOP_ICONS_SHOW_REMOVABLE         "/desktop-icons/file-icons/show-removable"
 
+#define DESKTOP_ICONS_CREATE_UNDER_CURSOR    "/desktop-icons/create-under-cursor"
+
 #define DESKTOP_MENU_MAX_TEMPLATE_FILES     "/desktop-menu/max-template-files"
 
 /**
diff --git a/doc/README.xfconf b/doc/README.xfconf
index 7456eca1..fa7756d9 100644
--- a/doc/README.xfconf
+++ b/doc/README.xfconf
@@ -48,6 +48,7 @@ the same monitor is plugged in again those settings apply to it.
     <single-click bool>
     <show-thumbnails bool>
     <show-hidden-files bool>
+    <create-under-cursor bool>
     <show-tooltips bool>
     <tooltip-size double>
     <file-icons>
diff --git a/src/xfdesktop-file-icon-manager.c b/src/xfdesktop-file-icon-manager.c
index cbf0ec57..26d4c72a 100644
--- a/src/xfdesktop-file-icon-manager.c
+++ b/src/xfdesktop-file-icon-manager.c
@@ -94,6 +94,7 @@ typedef enum
     PROP_SHOW_UNKNOWN_VOLUME,
     PROP_SHOW_THUMBNAILS,
     PROP_SHOW_HIDDEN_FILES,
+    PROP_CREATE_UNDER_CURSOR,
     PROP_MAX_TEMPLATES,
 } XfdesktopFileIconManagerProp;
 
@@ -152,6 +153,12 @@ struct _XfdesktopFileIconManagerPrivate
 
     XfdesktopThumbnailer *thumbnailer;
 
+    gboolean create_under_cursor;
+    gboolean dropped;
+    GList *saved_file_list;
+    gint16 saved_row;
+    gint16 saved_col;
+
     guint max_templates;
     guint templates_count;
 };
@@ -223,6 +230,10 @@ static void xfdesktop_file_icon_manager_update_image(GtkWidget *widget,
                                                      gchar *thumbfile,
                                                      XfdesktopFileIconManager *fmanager);
 
+static void
+xfdesktop_file_icon_manager_set_create_under_cursor(XfdesktopFileIconManager *manager,
+                                                    gboolean create_under_cursor);
+
 static void
 xfdesktop_file_icon_manager_set_max_templates(XfdesktopFileIconManager *manager,
                                               gint max_templates);
@@ -351,6 +362,12 @@ xfdesktop_file_icon_manager_class_init(XfdesktopFileIconManagerClass *klass)
                                                          "show-hidden-files",
                                                          FALSE,
                                                          XFDESKTOP_PARAM_FLAGS));
+    g_object_class_install_property(gobject_class, PROP_CREATE_UNDER_CURSOR,
+                                    g_param_spec_boolean("create-under-cursor",
+                                                         "create-under-cursor",
+                                                         "create-under-cursor",
+                                                         FALSE,
+                                                         XFDESKTOP_PARAM_FLAGS));
     g_object_class_install_property(gobject_class, PROP_MAX_TEMPLATES,
                                     g_param_spec_uint("max-templates",
                                                       "max-templates",
@@ -377,6 +394,12 @@ xfdesktop_file_icon_manager_init(XfdesktopFileIconManager *fmanager)
     fmanager->priv->thumbnailer = xfdesktop_thumbnailer_new();
 
     g_signal_connect(G_OBJECT(fmanager->priv->thumbnailer), "thumbnail-ready", G_CALLBACK(xfdesktop_file_icon_manager_update_image), fmanager);
+
+    fmanager->priv->dropped = FALSE;
+
+    fmanager->priv->saved_file_list = NULL;
+    fmanager->priv->saved_row = -1;
+    fmanager->priv->saved_col = -1;
 }
 
 static void
@@ -430,6 +453,11 @@ xfdesktop_file_icon_manager_set_property(GObject *object,
                                                               g_value_get_boolean(value));
             break;
 
+        case PROP_CREATE_UNDER_CURSOR:
+            xfdesktop_file_icon_manager_set_create_under_cursor(fmanager,
+                                                                g_value_get_boolean(value));
+            break;
+
         case PROP_MAX_TEMPLATES:
             xfdesktop_file_icon_manager_set_max_templates(fmanager,
                                                           g_value_get_uint(value));
@@ -492,6 +520,10 @@ xfdesktop_file_icon_manager_get_property(GObject *object,
             g_value_set_boolean(value, fmanager->priv->show_hidden_files);
             break;
 
+        case PROP_CREATE_UNDER_CURSOR:
+            g_value_set_boolean(value, fmanager->priv->create_under_cursor);
+            break;
+
         case PROP_MAX_TEMPLATES:
             g_value_set_int(value, fmanager->priv->max_templates);
             break;
@@ -520,6 +552,8 @@ xfdesktop_file_icon_manager_finalize(GObject *obj)
     if(fmanager->priv->volume_monitor != NULL)
         g_object_unref(fmanager->priv->volume_monitor);
 
+    g_list_free(fmanager->priv->saved_file_list);
+
     G_OBJECT_CLASS(xfdesktop_file_icon_manager_parent_class)->finalize(obj);
 }
 
@@ -2676,6 +2710,75 @@ xfdesktop_file_icon_manager_key_press(GtkWidget *widget,
     return FALSE;
 }
 
+static void
+lookup_cursor_position(XfdesktopFileIconManager *fmanager,
+                       GFile                    *file,
+                       gint16                   *row,
+                       gint16                   *col,
+                       gboolean                  file_is_launcher)
+{
+    /* */
+
+    if(file_is_launcher) {
+        /* Launcher was created, retrieve clicked position */
+        xfdesktop_icon_view_get_clicked_position(fmanager->priv->icon_view, row, col);
+
+    } else if(xfdesktop_file_utils_get_created_file()) {
+        /* New folder or file from template was created,
+         * retrieve clicked position */
+        xfdesktop_icon_view_get_clicked_position(fmanager->priv->icon_view, row, col);
+        /* Unset "created file" event */
+        xfdesktop_file_utils_set_created_file(FALSE);
+
+    } else if(fmanager->priv->dropped) {
+        /* Files were dragged and dropped onto the desktop,
+         * this includes transferred media from web browsers */
+
+        /* Load saved position from DnD event */
+        *row = fmanager->priv->saved_row;
+        *col = fmanager->priv->saved_col;
+
+        if(fmanager->priv->saved_file_list) {
+            GList *l;
+            gchar *basename = g_file_get_basename(file);
+            gboolean found = FALSE;
+
+            /* Check if file is in list of transferred files */
+            for(l = fmanager->priv->saved_file_list; l; l = l->next) {
+                gchar *basename_tmp = g_file_get_basename(l->data);
+                if(g_strcmp0(basename, basename_tmp) == 0) {
+                    fmanager->priv->saved_file_list = g_list_remove(
+                        fmanager->priv->saved_file_list, l->data);
+                    found = TRUE;
+                }
+                g_free(basename_tmp);
+            }
+
+            g_free(basename);
+
+            if(found) {
+                /* Find next free slot */
+                xfdesktop_icon_view_get_next_free_slot(fmanager->priv->icon_view,
+                                                       row, col);
+                fmanager->priv->saved_row = *row;
+                fmanager->priv->saved_col = *col;
+
+                return;
+            } else {
+                /* File not found, unset list */
+                g_list_free(fmanager->priv->saved_file_list);
+                fmanager->priv->saved_file_list = NULL;
+            }
+        }
+
+    } else {
+        *row = -1;
+        *col = -1;
+    }
+
+    fmanager->priv->dropped = FALSE;
+}
+
 static void
 xfdesktop_file_icon_manager_file_changed(GFileMonitor     *monitor,
                                          GFile            *file,
@@ -2745,6 +2848,14 @@ xfdesktop_file_icon_manager_file_changed(GFileMonitor     *monitor,
             }
 
             if(file_info) {
+                /* Check if the icon should be placed under the cursor */
+                if(fmanager->priv->create_under_cursor
+                   && xfdesktop_file_utils_is_desktop_file(file_info))
+                {
+                    lookup_cursor_position(fmanager, file, &row, &col, TRUE);
+                } else
+                    row = col = -1;
+
                 /* Add the icon adding the row/col info */
                 icon = xfdesktop_file_icon_manager_add_regular_icon(fmanager,
                                                                     other_file,
@@ -2801,10 +2912,20 @@ xfdesktop_file_icon_manager_file_changed(GFileMonitor     *monitor,
             file_info = g_file_query_info(file, XFDESKTOP_FILE_INFO_NAMESPACE,
                                           G_FILE_QUERY_INFO_NONE, NULL, NULL);
             if(file_info) {
-                xfdesktop_file_icon_manager_add_regular_icon(fmanager,
-                                                             file, file_info,
-                                                             -1, -1,
-                                                             TRUE);
+                /* Check if the icon should be placed under the cursor */
+                if(fmanager->priv->create_under_cursor)
+                    lookup_cursor_position(fmanager, file, &row, &col, FALSE);
+                else
+                    row = col = -1;
+
+                icon = xfdesktop_file_icon_manager_add_regular_icon(fmanager,
+                                                                    file,
+                                                                    file_info,
+                                                                    row,
+                                                                    col,
+                                                                    TRUE);
+                if(icon && fmanager->priv->create_under_cursor)
+                    xfdesktop_file_icon_position_changed(icon, fmanager);
 
                 g_object_unref(file_info);
             }
@@ -3471,6 +3592,8 @@ xfdesktop_file_icon_manager_drag_drop(XfdesktopIconViewManager *manager,
                                 GDK_PROP_MODE_REPLACE, (const guchar *)uri,
                                 strlen(uri));
 
+            fmanager->priv->dropped = TRUE;
+
             g_free(prop_text);
             g_free(uri);
         }
@@ -3487,6 +3610,10 @@ xfdesktop_file_icon_manager_drag_drop(XfdesktopIconViewManager *manager,
         }
     }
 
+    /* save drop position */
+    fmanager->priv->saved_row = row;
+    fmanager->priv->saved_col = col;
+
     TRACE("target good");
 
     gtk_drag_get_data(widget, context, target, time_);
@@ -3787,6 +3914,10 @@ xfdesktop_file_icon_manager_drag_data_received(XfdesktopIconViewManager *manager
                 g_object_unref(base_dest_file);
 
                 if(dest_file_list) {
+                    /* update saved file list */
+                    g_list_free(fmanager->priv->saved_file_list);
+                    fmanager->priv->saved_file_list = file_list;
+
                     dest_file_list = g_list_reverse(dest_file_list);
 
                     drop_ok = xfdesktop_file_utils_transfer_files(action,
@@ -3804,6 +3935,9 @@ xfdesktop_file_icon_manager_drag_data_received(XfdesktopIconViewManager *manager
         }
     }
 
+    if(drop_ok)
+        fmanager->priv->dropped = TRUE;
+
     XF_DEBUG("finishing drop on desktop from external source: drop_ok=%s, copy_only=%s",
              drop_ok?"TRUE":"FALSE", copy_only?"TRUE":"FALSE");
 
@@ -3979,6 +4113,8 @@ xfdesktop_file_icon_manager_new(GFile *folder,
                            G_OBJECT(fmanager), "show-thumbnails");
     xfconf_g_property_bind(channel, DESKTOP_ICONS_SHOW_HIDDEN_FILES, G_TYPE_BOOLEAN,
                            G_OBJECT(fmanager), "show-hidden-files");
+    xfconf_g_property_bind(channel, DESKTOP_ICONS_CREATE_UNDER_CURSOR, G_TYPE_BOOLEAN,
+                           G_OBJECT(fmanager), "create-under-cursor");
     xfconf_g_property_bind(channel, DESKTOP_MENU_MAX_TEMPLATE_FILES, G_TYPE_INT,
                            G_OBJECT(fmanager), "max-templates");
 
@@ -4103,6 +4239,20 @@ xfdesktop_file_icon_manager_set_show_hidden_files(XfdesktopFileIconManager *mana
     g_signal_emit(G_OBJECT(manager), fmanager_signals[HIDDEN_STATE_CHANGED], 0);
 }
 
+static void
+xfdesktop_file_icon_manager_set_create_under_cursor(XfdesktopFileIconManager *manager,
+                                                    gboolean create_under_cursor)
+{
+    g_return_if_fail(XFDESKTOP_IS_FILE_ICON_MANAGER(manager));
+
+    TRACE("entering create_under_cursor %s", create_under_cursor ? "TRUE" : "FALSE");
+
+    if(create_under_cursor == manager->priv->create_under_cursor)
+        return;
+
+    manager->priv->create_under_cursor = create_under_cursor;
+}
+
 static void
 xfdesktop_file_icon_manager_set_max_templates(XfdesktopFileIconManager *manager,
                                               gint max_templates)
diff --git a/src/xfdesktop-file-utils.c b/src/xfdesktop-file-utils.c
index 86856d56..ed96f0d0 100644
--- a/src/xfdesktop-file-utils.c
+++ b/src/xfdesktop-file-utils.c
@@ -85,6 +85,20 @@ static XfdesktopThunar *xfdesktop_file_utils_peek_thunar_proxy(void);
 static gpointer xfdesktop_file_utils_peek_thunar_proxy(void);
 #endif
 
+static gboolean xfdesktop_file_utils_created_file = FALSE;
+
+gboolean
+xfdesktop_file_utils_get_created_file()
+{
+    return xfdesktop_file_utils_created_file;
+}
+
+void
+xfdesktop_file_utils_set_created_file(gboolean created_file)
+{
+    xfdesktop_file_utils_created_file = created_file;
+}
+
 gboolean
 xfdesktop_file_utils_is_desktop_file(GFileInfo *info)
 {
@@ -1001,8 +1015,10 @@ static void
 create_file_cb (GObject *source_object, GAsyncResult *res, gpointer user_data)
 {
     GError *error = NULL;
-    if (!xfdesktop_file_manager_call_create_file_finish(XFDESKTOP_FILE_MANAGER(source_object), res, &error))
+    if (!xfdesktop_file_manager_call_create_file_finish(XFDESKTOP_FILE_MANAGER(source_object), res, &error)) {
         xfdesktop_file_utils_async_handle_error(error, user_data);
+        xfdesktop_file_utils_created_file = FALSE;
+    }
 }
 
 void
@@ -1025,6 +1041,8 @@ xfdesktop_file_utils_create_file(GFile *parent_folder,
         gchar *display_name = g_strdup(gdk_display_get_name(gdk_screen_get_display(screen)));
         gchar *startup_id = g_strdup_printf("_TIME%d", gtk_get_current_event_time());
 
+        xfdesktop_file_utils_created_file = TRUE;
+
         xfdesktop_file_utils_set_window_cursor(parent, GDK_WATCH);
 
 
@@ -1056,8 +1074,10 @@ static void
 create_file_from_template_cb (GObject *source_object, GAsyncResult *res, gpointer user_data)
 {
     GError *error = NULL;
-    if (!xfdesktop_file_manager_call_create_file_from_template_finish(XFDESKTOP_FILE_MANAGER(source_object), res, &error))
+    if (!xfdesktop_file_manager_call_create_file_from_template_finish(XFDESKTOP_FILE_MANAGER(source_object), res, &error)) {
         xfdesktop_file_utils_async_handle_error(error, user_data);
+        xfdesktop_file_utils_created_file = FALSE;
+    }
 }
 
 void
@@ -1082,6 +1102,8 @@ xfdesktop_file_utils_create_file_from_template(GFile *parent_folder,
         gchar *display_name = g_strdup(gdk_display_get_name(gdk_screen_get_display(screen)));
         gchar *startup_id = g_strdup_printf("_TIME%d", gtk_get_current_event_time());
 
+        xfdesktop_file_utils_created_file = TRUE;
+
         xfdesktop_file_utils_set_window_cursor(parent, GDK_WATCH);
 
 
diff --git a/src/xfdesktop-file-utils.h b/src/xfdesktop-file-utils.h
index 1fb2591b..c2e85d87 100644
--- a/src/xfdesktop-file-utils.h
+++ b/src/xfdesktop-file-utils.h
@@ -115,6 +115,8 @@ gboolean xfdesktop_file_utils_transfer_files(GdkDragAction action,
 gboolean xfdesktop_file_utils_dbus_init(void);
 void xfdesktop_file_utils_dbus_cleanup(void);
 
+gboolean xfdesktop_file_utils_get_created_file();
+void xfdesktop_file_utils_set_created_file(gboolean value);
 
 
 #ifdef HAVE_THUNARX
diff --git a/src/xfdesktop-icon-view.c b/src/xfdesktop-icon-view.c
index a21a7ad0..1ce0d1a7 100644
--- a/src/xfdesktop-icon-view.c
+++ b/src/xfdesktop-icon-view.c
@@ -194,6 +194,9 @@ struct _XfdesktopIconViewPrivate
 
     gboolean single_click;
     gint gravity;
+
+    gint16 clicked_row;
+    gint16 clicked_col;
 };
 
 static void xfce_icon_view_set_property(GObject *object,
@@ -681,6 +684,9 @@ xfdesktop_icon_view_init(XfdesktopIconView *icon_view)
 
     context = gtk_widget_get_style_context(GTK_WIDGET(icon_view));
     gtk_style_context_add_class(context, GTK_STYLE_CLASS_VIEW);
+
+    icon_view->priv->clicked_row = -1;
+    icon_view->priv->clicked_col = -1;
 }
 
 static void
@@ -933,6 +939,11 @@ xfdesktop_icon_view_button_press(GtkWidget *widget,
             /* Since we're not over any icons this won't be the start of a
              * drag so we can pop up menu */
             if(evt->button == 3 || (evt->button == 1 && (evt->state & GDK_SHIFT_MASK))) {
+                /* save clicked position */
+                xfdesktop_xy_to_rowcol(icon_view, evt->x, evt->y,
+                                       &(icon_view->priv->clicked_row),
+                                       &(icon_view->priv->clicked_col));
+
                 xfce_desktop_popup_root_menu(XFCE_DESKTOP(widget), evt->button, evt->time);
                 return TRUE;
             }
@@ -4431,6 +4442,30 @@ xfdesktop_icon_view_get_window_widget(XfdesktopIconView *icon_view)
     return icon_view->priv->parent_window;
 }
 
+void
+xfdesktop_icon_view_get_clicked_position(XfdesktopIconView *icon_view,
+                                         gint16 *row,
+                                         gint16 *col)
+{
+    g_return_if_fail(XFDESKTOP_IS_ICON_VIEW(icon_view));
+
+    *col = icon_view->priv->clicked_col;
+    *row = icon_view->priv->clicked_row;
+}
+
+void
+xfdesktop_icon_view_get_next_free_slot(XfdesktopIconView *icon_view,
+                                       gint16 *row,
+                                       gint16 *col)
+{
+    g_return_if_fail(XFDESKTOP_IS_ICON_VIEW(icon_view));
+
+    /* Find the next available slot for an icon */
+    while(!xfdesktop_grid_is_free_position(icon_view, *row, *col)) {
+        xfdesktop_next_slot(icon_view, col, row, icon_view->priv->ncols, icon_view->priv->nrows);
+    }
+}
+
 #if defined(DEBUG) && DEBUG > 0
 guint
 _xfdesktop_icon_view_n_items(XfdesktopIconView *icon_view)
diff --git a/src/xfdesktop-icon-view.h b/src/xfdesktop-icon-view.h
index 94d1f423..95578df2 100644
--- a/src/xfdesktop-icon-view.h
+++ b/src/xfdesktop-icon-view.h
@@ -125,6 +125,13 @@ void xfdesktop_icon_view_set_center_text (XfdesktopIconView *icon_view,
 
 GtkWidget *xfdesktop_icon_view_get_window_widget(XfdesktopIconView *icon_view);
 
+void xfdesktop_icon_view_get_clicked_position(XfdesktopIconView *icon_view,
+                                              gint16 *row,
+                                              gint16 *col);
+void xfdesktop_icon_view_get_next_free_slot(XfdesktopIconView *icon_view,
+                                            gint16 *row,
+                                            gint16 *col);
+
 gboolean
 xfdesktop_get_workarea_single(XfdesktopIconView *icon_view,
                               guint ws_num,